Calculate the Profitability Index for the Cash Flows Provided in the Table

question 16

Multiple Choice

Calculate the profitability index for the cash flows provided in the table below.Note: The negative cash flow for year 0 is the initial investment for the project.Assume a required rate of return of 9.00%

• A)0.85
• B)0.90
• C)1.00
• D)1.11

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Definitions:

Acquiring Suppliers

The process of taking over or purchasing suppliers to control the supply chain, reduce costs, or secure resources.

Distributors

Entities involved in the supply chain that purchase products from manufacturers and sell them to retailers or directly to consumers.

Diversification

A strategy of investing in a variety of assets to reduce exposure to any single asset or risk.

Different Business Area

Various sectors or divisions within a business environment that each focus on distinct operational or market-related activities.